It’s still difficult to afford a home despite low interest rates and a recovering economic environment due stiff lending standards by banks. Add on the fact that many home values have still not fully recovered from pre-crisis levels, and it’s easy to see why help is needed. Owners of these homes usually cannot qualify for traditional refinancing. The HARP ( Home Affordable Refinance Program) was introduced to allow these owners to refinance their homes after the housing market collapsed in 2006-2007.

HARP Qualifications

1) The mortgage firstly must be owned by Freddie Mac or Fannie Mae. If the mortgage was not sold to either Freddie Mac or Fannie Mae before 31st May 2009, it won’t qualify for refinancing.

2) The loan to value ratio at the time of refinancing must be above eighty percent.

3) The homeowner must show him or herself to be a responsible homeowner by making timely payments at least in the past twelve months prior to refinancing.

4) The mortgage cannot be refinanced under HARP twice unless the first refinancing came between March 2009 and May 2009 under Fannie Mae.

Benefits of HARP Over Conventional Loans

This type of refinance mortgage has many advantages over taking out conventional loans.

1) HARP loans can finance more than 105 percent of the value of the home e.g. negative equity.  Those who have recently been subjected to decreases in income can apply for these loans.

2) Sometimes no appraisals are required for the loan.

3) No mortgage insurance is required for HARP loans.

4) A minimum credit score is not part of the equation for HARP either even though a source of income has to be shown.

5) If one has two homes, only the first residence is eligible. Also, the home has to be a one to four unit house.

HARP Program Gets Extended

The HARP was supposed to expire on 31st December 2013. However, seeing that more people could be benefited by this refinancing program, the FHFA, Federal Housing Finance Agency, decided to extend the deadline to 31 December, 2015. The idea is that the economic situation continues to improve for the next two and a half years until the HARP program is gradually decommissioned.

The rules remain almost the same for the latest HARP program. The main thing to know is there is no maximum limit on the loan to value ratio for those who decide to take up a fixed rate mortgage. For those who decide to take up an adjustable rate mortgage, the maximum LTV ratio is 105 percent.

Condominiums and investment properties are eligible under the new rules. Thus a vacation home, which was perhaps the primary residence before, will be covered by HARP under the new rules. The costs associated with refinancing will also be lower if the loan is being changed into one with a shorter term under HARP.

HARP Isn’t Fully Maximized Yet

In January 2013, the total count of borrowers who refinanced thanks to HARP was more than 2.2 million. The FHFA does hope that more owners will participate in the program. They are set to launch a nationwide campaign to spread the word about the extension and to encourage more people to join.

Considering that 2.2 million people have enrolled into HARP, the program could be counted as a success. However, when the Obama administration introduced this refinance mortgage program, they expected a 2.2 million count within 16 months, and not four years.

One of the reasons for the short fall is that plenty of mortgages were not owned by Freddie Mac or Fannie Mae between 2001 and 2007; currently 90 percent of mortgages are owned by them. Mortgages owned by the bank are not eligible for HARP. The new rules unfortunately do not change this.

HARP of course is not advantageous to the homeowner only. It is also advantageous to the lending institution as, due to the lower interest rate, chances of default due to being unable to pay a mortgage are decreased. Thus, will the extension of HARP help many others save their homes? Will the Obama administration be able to convince many troubled homeowners to participate in the program? Probably. But, it’s up to homeowners to take action.


Shop for a better mortgage. LendingTree Mortgage offers some of the lowest refinance rates because they have a huge network of lenders to provide mortgage loans, home equity loans, and home equity lines of credit. If you’re looking to buy a new home, consider using LendingTree to get multiple offer comparisons in a matter of minutes. When banks compete, you win.

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Updated for 2017 and beyond.